SPEAKERS: Sharon Birkman, CEO and chair, Birkman International; Ganesh Iyer, president and CEO, Etnyre International; Heather O’Keefe, partner, Egon Zehnder; Sarah Lodge Tally, fifth-generation owner and director, Lodge Cast Iron
O’KEEFE: What does an effective relationship between the board and management look like?
IYER: I don’t think there’s a perfect formula, but I do know what doesn’t work.
Seven or eight years ago, our board was largely a rubber stamp, and that’s a complete waste of talent. If you’re going to assemble a board of experienced, accomplished people, you need to use that expertise. At the same time, the opposite extreme is micromanagement.
The challenge is finding the balance between those two extremes. A CEO has to be confident enough and secure enough to invite input, while also understanding that management is responsible for running the business. The board is there to provide oversight, guidance and perspective.
We don’t always get that balance right, but we’re constantly trying to improve it.
LODGE TALLY: I think the answer depends on the company. Different organizations need different board-management dynamics, and what works in one setting may not work in another. But for us, the key has been bringing in truly independent directors who have expertise that the family simply doesn’t possess.
Our independent directors have become valuable resources not only for the board but also for management. They provide perspectives and experience that we otherwise wouldn’t have access to. That’s been tremendously helpful in improving the quality of our decision-making.
BIRKMAN: Businesses are complicated. Families are complex. Together, they can be a combustible combination. That’s one reason why the board relationship is so important.
There have been many times when our board has provided invaluable guidance. There have also been occasions when advice looked right at the time but turned out differently because none of us could predict the future. That’s simply part of governance.
What matters is having a board that is willing to engage honestly and help the company navigate difficult decisions.
O’KEEFE: How open should communication be between directors and management?
LODGE TALLY: Our approach is very open. Directors and members of management communicate freely. If I’m reaching out to someone on the management team, I generally let our CEO know, but he doesn’t feel the need to be involved in every conversation.
We’ve built strong relationships between directors and management over time. One thing that has helped is including senior leaders in dinners and informal interactions around board meetings. Those relationships create trust and make it easier to have productive conversations.
The communication goes both ways. Management regularly reaches out to directors for advice and perspective as well.
IYER: I think this starts with the CEO. A CEO has to be secure in his or her own skin. If a CEO feels threatened every time a board member talks to someone on the management team, that’s a problem. Directors should be able to interact with management, and management should feel comfortable talking with directors.
That said, nobody likes surprises. I tell my team that they can speak with board members whenever they want. The only thing I ask is that I not be blindsided later by a conversation I knew nothing about. As long as communication is transparent, I think boards should encourage those relationships.
BIRKMAN: We have directors with deep financial expertise who communicate directly with members of our accounting and finance teams. That’s been incredibly valuable. At the same time, I learned an important lesson when one of our directors stepped into an operational role on an interim basis.
We were evaluating a senior marketing position, and one of our directors had significant expertise in that area. Initially, it worked very well. But after a period of time, the director became attached to the role and began suggesting that perhaps the arrangement should become permanent.
That experience taught me that while directors can be extremely helpful operationally in specific situations, there needs to be clear boundaries and end points. Today, that individual is back to serving as an independent director, and the relationship is excellent.
O’KEEFE: How do boards avoid becoming too involved in management’s responsibilities?
IYER: There are times when board discussions go so deep that you find yourself thinking, “If you’d like to do my job, you’re welcome to.” That’s not healthy.
A board should be doing more than policing management, but it shouldn’t be managing the company either. When I feel we’re crossing that line, I usually address it outside the boardroom. I don’t like reacting in the moment. A private conversation tends to be much more productive.
LODGE TALLY: Sometimes directors simply get excited. We enjoy solving problems. We enjoy helping. Before long, we’re deep in operational details.
There have been times when someone on our board has had to say, “Wait a minute. We’re getting too far into the weeds. This is management’s job.” That self-awareness is important. The board should recognize when it is drifting into management territory so that the CEO doesn’t have to point it out.
IYER: I think part of the challenge is that directors genuinely want to add value. The desire to help often leads people deeper into the details.
Personally, I don’t think there’s anything wrong with understanding the details. The issue is where and how those discussions take place. As long as nobody feels threatened and everyone understands their role, those conversations can still be productive.
BIRKMAN: There can also be benefits when directors temporarily engage more deeply with the business. We had another director help us recruit a controller. She worked closely with our finance team for a short period, helped us make the hire and then stepped back. Because of that experience, she gained a much deeper understanding of the company and our people.
The key is making sure that involvement remains temporary and that directors eventually return to their governance role.
O’KEEFE: How do you build trust between the board, management and the CEO?
BIRKMAN: Trust begins with communication, openness, psychological safety and honest conversations. In our company, trust has never really been the issue. The challenge is determining the appropriate level of involvement. But the foundation has always been trust, and that extends throughout the organization, from the board to the leadership team and beyond.
LODGE TALLY: For us, trust comes from relationships. It’s not complicated, but it does take time. We intentionally create opportunities for directors and management to spend time together outside formal board meetings. That’s how relationships develop.
One benefit of those relationships is that people become more willing to share concerns. If a member of the management team sees something the board may not see, they may feel more comfortable raising it because a relationship already exists. That’s incredibly valuable.
IYER: One thing I do is schedule one-on-one conversations with every board member between meetings. I do it whether I think it’s necessary or not. People often bring up issues in a relaxed one-on-one conversation that they would never raise in a formal board meeting. I also encourage my management team to communicate directly with directors. Ultimately, that openness should be part of the company’s culture. People should feel comfortable speaking up, sharing concerns and asking questions at every level of the organization.